LONDON (Reuters) - Britain kicks off the first round of substantive Brexit talks in Brussels today with a government bitterly divided over the type of outcome it wants from them.
Most of the noise surrounds Finance Minister Philip Hammond, who has emerged as the champion of a "soft Brexit" prioritising trade ties with the EU over curbing immigration: he intimated over the weekend he was under attack from hard Brexiters "who are not happy with (my) agenda" after a series of cabinet leaks intended to undermine him.
Nonetheless, he judged that his view that Britain would require a gentle transition towards Brexit aimed at limiting the damage for business and jobs was now gaining traction in Theresa May’s government.
None of this will be officially broached at this week’s four-day negotiating session, which according to the chronology determined by the EU will focus on other priorities before a planned news conference on Thursday: citizens’ rights; the divorce bill; and the issue of Northern Ireland what will become its new EU land border. Talks today get going straight after an 0815 GMT handshake between Britain’s Brexit minister David Davis and EU negotiator Michel Barnier; just another 20 months to go.
Forecast-beating Chinese growth data and diminished expectations of the U.S. Federal Reserve raising interest rates again this year lifted shares in Asia and put European stocks on track for gains.
The dollar is holding near 10-month lows hit earlier on Monday against a basket of currencies and benchmark German bond yields are marginally down. The second-quarter China GDP data, showing year-on-year growth of 6.9 percent, also helped lift oil and copper prices.
Global stocks are close to record highs. The Dow Jones and S&P 500 both hit record closing levels on Friday after lacklustre U.S. inflation and retail sales data and the Chinese numbers added to that momentum, pushing MSCI’s main Asia-Pacific, excluding Japan, stock index up 0.4 percent. Chinese shares, however, are down quite sharply. Japanese markets are closed for a holiday. Emerging markets stocks are up 0.3 percent and have risen close to 5 percent in five days.
After their strongest week in more than two months, European shares are expected to start this week on a strong note too, with stocks futures up between 0.1 to 0.3 percent
While the U.S. earnings season got under way last Friday with some of the major investment banks reporting results, European trading could continue to be cautious with thin volumes and low volatility, though a number of Nordic firms including Telenor could be in focus after their updates.
On the macro side, June inflation figures for the euro zone are due at 0900 GMT.
Stock movers/company news: Telenor raises earnings margin outlook as Q2 core results beat; SGS sticks to 2020 objectives after H1 profit rise; German food-processing machinery maker GEA cuts 2017 profit guidance; AstraZeneca says CEO Pascal Soriot to host call on results; Unilever vies with Hormel to buy Reckitt food unit, the Sunday Times reported; SBM Offshore to get $247 million in Yme insurance settlement; UniCredit signs final deal with Pimco, Fortress for sale of 17.7 billion euros of bad loans; UK watchdog sets out terms for retail funds sector probe.
The dollar index is up 0.1 percent on the day but still close to those 10-month lows. The euro and yen are both down about 0.2 percent and sterling 0.1 percent against the U.S. currency.
Benchmark German government bond yields, which fell in line with those on U.S. Treasuries on Friday, are flat so far. Investors are focused on the European Central Bank’s policy meeting on Thursday and whether it will give any signals on plans to wind back its ultra-loose monetary policy.
Brent crude oil is up seven cents a barrel at $48.98. The weak dollar and Chinese demand has pushed copper up 1.1 percent to $5,990 a tonne. Gold is up 0.1 percent at $1,230 an ounce.
Editing by Andrew Heavens